Baidu Turns to Huawei for AI Chips
Breaking From Nvidia, Baidu Brings Its Semiconductors Home
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Chinese internet company Baidu, a longtime customer of United States based artificial intelligence chip maker Nvidia, is now turning to Shenzhen-based Huawei for its AI chip needs. The Chinese internet giant recently placed an order for 1,600 Huawei Ascend 910B AI chips, intended for 200 servers, signaling a shift away from US suppliers.
The move comes amidst tightening restrictions on tech exports to China by the United States, including Nvidia chips. Earlier this year, reports suggested that Chinese internet giants were scrambling to acquire and stockpile Nvidia chips to train their AI models and run their data centers. Nvidia, a trillion-dollar company based in Santa Clara, California, has received over $5 billion in orders for its A800 and A100 chips from China through 2024, highlighting the demand for its powerful chips in the Chinese market.
However, this recent 450 million yuan ($61.83 million) chip deal between Baidu and Huawei reveals a changing strategy. Chinese companies are losing faith in continued access to US chip makers and are actively seeking non-US suppliers. While this deal may be relatively small in scale, it signifies a larger trend of diversification and reduced reliance on US technology.
To understand the context behind this shift, it's important to look at the timeline of restrictions on Nvidia chip imports to China. In October 2022, the US Commerce Department implemented a ban on supplying advanced chips and chip-making equipment to China, with the aim of limiting China's ability to produce cutting-edge chips for defense technology. Nvidia's A100 and H100 chips were directly impacted by these restrictions.
In response, Nvidia introduced the A800 in November 2022, a modified version of the A100 that bypassed export restrictions. The company continued to innovate, releasing the H800 in March 2023 as an alternative to the banned H100 chips, ensuring compliance with the parameters outlined by the Commerce Department.
Despite these efforts, the demand for non-US suppliers has only grown stronger. Chinese companies like Baidu are now turning to Huawei, a domestic supplier, to fulfill their AI chip needs. This shift not only diversifies the supply chain but also reduces the risk of being affected by future export restrictions imposed by the United States.
As the competition in the AI chip market intensifies, non-US suppliers like Huawei may gain traction and challenge the dominance of US chip makers like Nvidia. With Chinese companies actively seeking alternatives, the landscape of the AI chip industry is bound to undergo significant changes in the coming years.
Baidu's decision to purchase AI chips from Huawei reflects a larger trend of Chinese companies diversifying their chip suppliers in response to tightening US export restrictions. As the demand for powerful AI chips continues to grow, non-US suppliers like Huawei are poised to make significant strides in the market. The shift highlights the evolving dynamics of the AI chip industry and the need for companies to adapt to changing geopolitical realities.